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Question
Microeconomics
Posted 6 months ago

The demand and supply schedules for lawn mowing are given below:
\begin{tabular}{lll} 
Price & Quantity demanded & Quantity Supplied \\
\hline$20\$ 20 & 0 & 12 \\
$18\$ 18 & 2 & 10 \\
$16\$ 16 & 2 & 8 \\
$14\$ 14 & 3 & 6 \\
$12\$ 12 & 4 & 4 \\
$10\$ 10 & 5 & 2 \\
$8\$ 8 & 6 & 0
\end{tabular}

Which of the following best describes why a price of $16\$ 16 would not be considered an equilibrium price?

Choose 1 answer:
(A) Quantity supplied is less than quantity demanded, causing a surplus, which will cause the price to fall
(B) Quantity supplied is greater than quantity demanded, causing a shortage, which will cause the price to rise.
(c) Quantity supplied is less than quantity demanded, causing a shortage, which will cause the price to rise.
(D) Quantity supplied is greater than quantity demanded, causing a surplus, which will cause the price to fall.
(E) Quantity supplied is greater than quantity demanded, causing a surplus, which will cause the price to rise.
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Answer from Sia
Posted 6 months ago
Solution
a
Equilibrium Price: The equilibrium price is the price at which the quantity demanded equals the quantity supplied
b
Analysis of 16Price:Atapriceof16 Price: At a price of 16, the quantity demanded is 2, and the quantity supplied is 8
c
Surplus Identification: Since the quantity supplied (8) is greater than the quantity demanded (2), there is a surplus
d
Price Adjustment: A surplus typically causes the price to fall as suppliers try to sell their excess goods
Answer
(D) Quantity supplied is greater than quantity demanded, causing a surplus, which will cause the price to fall.
Key Concept
Surplus and Price Adjustment
Explanation
When the quantity supplied exceeds the quantity demanded, a surplus occurs, leading to downward pressure on the price.

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